Modern Healthcare’s putative report on CMS’ 340B remedy proposal is completely wrong and irresponsible for the following reasons.

First, to reach its conclusions the article relies on quotes from an academic whose 340B research is funded in whole or in part by an organization with an anti-hospital agenda. That disqualifies it as truly independent. 

Second, it uses a completely inapplicable apples-to-oranges analytic approach. It compares CMS’ recently published data on the amount 340B hospitals are to be repaid for CMS’ unlawful Medicare outpatient payment cuts to hospitals’ reported uncompensated care data expressed as a percentage of hospital expenses. Hospitals’ uncompensated care is not even a component of CMS’ Medicare outpatient payment methodology, nor the proposed court ordered remedy. In fact, it is not even a factor in determining a hospital’s 340B eligibility.

Third, the analysis uses 340B hospitals’ uncompensated care as the only measure of these hospitals value to their communities. It deliberately ignores the nearly $70 billion in community benefit provided by 340B hospitals and the significant and pervasive underpayment of public payors such as Medicaid and Medicare. According to AHA’s data, hospitals received payment of only 88 cents for every dollar they spent caring for Medicaid patients and 84 cents on the dollar for Medicare in 2020. This underpayment resulted in a Medicaid shortfall of $24.8 billion in 2020 and even greater shortfall for Medicare of more than $75 billion. 

Fourth, it fails to acknowledge that 340B DSH hospitals provided more than three-quarters (77 percent) of all hospital care for Medicaid patients who are among the poorest population in every community and in doing so are absolutely fulfilling the purpose of the 340B program to provide more patients with more services.   

This report should be viewed with the derision it deserves. It is decidedly not independent. Nine truly independent Supreme Court justices agreed that the cuts to 340B hospitals were illegal. These hospitals deserve to be repaid fully as recompense for that illegal policy. End of story.

Melinda Hatton is AHA’s general counsel and secretary.

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